At a Glance
Fixed Index Annuities (FIAs) are purpose-built for high-income retirees who need guaranteed lifetime income they can never outlive. They offer 100% principal protection with a 0% floor, index-linked growth potential, and pension-like income guaranteed for life — with no market risk. For those 60+, FIAs eliminate longevity risk and ensure your retirement wealth generates reliable income no matter how long you live.
How It Works
Alternative Income Funding Vehicle
Fixed Index Annuities (FIAs) serve as an alternative retirement income funding vehicle, particularly for those 67+ who prioritize guaranteed income over wealth accumulation strategies.
Principal Protection Guarantee
FIAs provide 100% principal protection with a 0% floor—you never lose money due to market downturns, regardless of severity.
Index-Linked Interest
Interest credits are tied to market index performance (typically S&P 500), subject to participation caps. If the index gains 15% and your cap is 8%, you earn 8%. If the index loses money, you earn 0%.
Guaranteed Lifetime Income
Convert to guaranteed lifetime income through annuitization or optional income riders that provide guaranteed payments you can never outlive.
Pros
100% Principal Protection
Your principal is fully guaranteed with a 0% floor—you never lose money due to market volatility.
Guaranteed Lifetime Income
Optional income riders provide guaranteed payments for life, eliminating longevity risk and providing pension-like security.
Tax-Deferred Growth
Earnings compound tax-deferred without annual 1099 reporting, allowing faster growth without annual tax drag.
No Contribution Limits
Unlike qualified retirement accounts, there are no annual contribution limits for non-qualified annuities.
Cons
Surrender Charges
Early withdrawal during the surrender period (typically 5-10 years) incurs penalties, limiting liquidity.
Income Taxation
Withdrawals are taxed as ordinary income, unlike IUL policy loans which are tax-free.
No Step-Up in Basis
Beneficiaries receive annuities with embedded tax liability—gains are taxed as ordinary income.
Participation Caps
Caps limit upside potential—you capture only a portion of market gains (typically 6-12%).
Best For
Ages 66+
Individuals 66 and older who need guaranteed retirement income and cannot afford market risk in their portfolio.
Risk-Averse Investors
Those who cannot tolerate principal loss and prioritize safety and guarantees over growth potential.
Pension Replacement
Seeking to replicate pension-like guaranteed income streams to cover essential retirement expenses.
Longevity Protection
Concerned about outliving assets—want guaranteed lifetime income regardless of market performance or lifespan.
Take the PrimusMax Quiz℠
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A licensed agent will:
- Uncover your retirement income goals.
- Provide a product recommendation.
- Generate a retirement income proposal.
This information is for educational purposes only. FIA products vary by carrier. Please consult with a licensed financial professional before making any investment decisions.